Many people struggle with credit, but this is fairly normal in this day and age, especially when you consider the economic issues of today, as well as the lack of financial education available to children and teenagers.
With these things considered, there are still ways to build or fix your credit with credit cards.
There are plenty of credit cards that help build credit, but not all are worthy of your time, at least not at this point. In this article I will do my best to explain to you the best credit cards to help build credit, without (hopefully) boring you to death.
1. Secured Credit Cards
It may not be a word you want to hear, but secured is a good thing for many Americans. We are constantly being marketed to and it’s no wonder that we spend out of control year round, leaving us in massive debt, mainly credit card debt. Believe me, I know first hand.
But secured credit cards help prevent this by simply borrowing against your own money. When you sign up for secured credit cards you are essentially creating your own credit account with your own cash and then borrowing against it and paying only fees from the service provider. This is a good way to remind yourself that your money is important and you shouldn’t rack up more debt against it. But it also allows you to more easily build credit, as it requires only a soft pull from the credit provider who will be issuing your card. This means that you do not have any hard inquiries that will harm your credit, whether you are approved or not.
So, where do you get Secured Credit Cards? There are a lot of providers out there, but the ones that come to mind are Credit Unions and Capital One. Your local credit union should provide you with a way to get your own secured credit card that uses a Visa or Mastercard logo so that you can use it just like a credit card. ‘
Capital One also has it’s own brand of secured credit cards that allow you to get started with just $200. However, keep in mind that you should limit your monthly spending to an amount that you can easily pay back each month. You will be charged for APR (interest rates) each month if you do not pay off your payments in full at each billing cycle. If you want to save money while building credit, do the right thing and make smaller purchases that you can pay off in full each month. This means that if you use it to purchase a dinner with friends for $85.34, then be sure that you pay off that $85.34 on the next billing cycle to ensure that you do not pay interest for those charge(s) that you created during the month. It’s not worth it.
Another thing to keep in mind is that you will pay a yearly fee to the provider of these cards. I believe that Capital One charges $39.99 per year, but it’s worth it for most people who are trying to get their credit repaired and increase their credit score so that they can get unsecured credit cards.
The 2 providers I mentioned above are not the only providers on the market, but they will be the easiest to deal with, in my opinion. Using a local credit union is a great way to stay away from the large banks and help your local community at the same time.
2. Retail (Store) Cards
These cards can be from just about any retail store that you can imagine, but are tougher to get than secured credit cards. Many of these cards can be easier to obtain, or get approved for, due to the fact that the retailer wants to sell more products or services, so they allow people with lower credit scores to be approved. However, having fair credit and poor credit is a major difference. If you know your credit score and you believe that you have a good shot at getting approved, then by all means go for it. Just be sure that what you consider to be fair is actually considered fair.
For instance, a credit score of 590 is not fair, nor should you be applying for any cards that are not secured. You’re simply adding more harm to your score and you will not be approved. If your score is above 680 on most services, then you will have a better chance. Just keep in mind that you shouldn’t apply for another card if you get denied for the first one. Be realistic and find out what’s harming your score so that you can repair your credit quickly.
Many of these cards do not have yearly fees, just high APR’s in most cases. You can find these cards at just about any store or website, such as WalMart, Target, BestBuy or any other store you can think of.
Just be sure to look at reviews of these cards prior to applying, as you may find out a lot more about the card than you would reading the fine print.
3. Gas Cards
Gas cards, much like retail store cards can be easier to get than normal (typical) credit cards, but there’s something you need to remember:
The gas (fuel) cards that I’m talking about are not reward cards that are co-branded by credit card providers. The gas cards I’m speaking of are offered by the gas/fuel company themselves, not by major credit card companies. This is why it’s slightly easier (in many cases) to be approved for these cards compared to your standard rewards card.
When you apply for these gas cards make sure that you are applying for actual fuel cards offered by the company and not a credit card issuer such as Citi or Chase.
For instance, Chevron, Texaco and Shell all have their own cards that you can find quickly with a quick search. Just be sure to find the best card for you!
Building your credit will take some time, so be sure to not waste too much time while trying to build your credit up. Get out there and start small so you can build up over time. Remember to always keep your bills (purchases) small enough to pay off each billing cycle (monthly) so that you don’t delay your goal(s) in building your credit, or establishing your new credit.
Work with your local credit union so that you can find out other ways they may offer to help you build your credit!